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Please, explain the answer. A firm hedges the sale of an asset by going short to a futures on a similar asset with longer maturity
Please, explain the answer.
A firm hedges the sale of an asset by going short to a futures on a similar asset with longer maturity than the time of the sale. Assume that the basis of the futures increases unexpectedly. Which of the following is true? The hedger's position improves. The hedger's position worsens The hedger's position sometimes worsens and sometimes improves. The hedger's position stays the sameStep by Step Solution
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